Smiths Group completes detection unit sale in GBP2 billion deal
(Alliance News) - Smiths Group PLC on Tuesday said it had completed the sale of Smiths Detection to private equity firm CVC Capital Partners PLC, at an enterprise value of GBP2 billion.
The London-based engineering company originally reported the sale in early December.
The GBP2 billion enterprise value was 16.3 times the detection unit's headline operating profit of GBP122 million, and 12.5 times headline earnings before interest, tax, depreciation and amortisation of GBP160 million.
Smiths expects immediate receipt of GBP1.9 billion net proceeds from the sale, slightly up from previous guidance of GBP1.85 billion.
Smiths in April completed the sale of its Interconnect business, and the combined enterprise value of the Detection and Interconnect disposals is GBP3.3 billion.
Chief Executive Roland Carter noted that both divestments were "ahead of expectations in both timing and value".
"We look to the future as a focused premium industrial engineering company specialising in flow management and thermal solutions, confident that our strategy will deliver both growth and returns for all stakeholders," Carter continued.
Smiths plans to return GBP1.5 billion of the Detection sale proceeds to shareholders through an on-market buyback programme which will start once the current GBP1 million programme completes. As of June 26, GBP567 million of that programme had completed, and Smiths was on track to completed the initial GBP600 million tranche by the end of July.
The further GBP1.5 billion programme is expected to run through 2027. As a result of the fresh buyback plans, Smiths will seek shareholder approve to increase its buyback authorisation to 14.99% of issued capital, from the current threshold of 10%, at a general meeting on July 23.
With the Detection divestment completed, Smiths plans to disband its separation oversight committee. The board has approved setting up a chair's committee, to act on behalf of the board between board meetings.
Last month, Smiths cut full-year revenue guidance due to the impact of the conflict in the Middle East.
It now expects organic revenue growth of around 2% in the financial year to the end of July, versus prior guidance of 3% to 4%.
Smiths shares rose 1.9% to 2,576.00 pence on Tuesday afternoon in London.
By Holly Munks, Alliance News reporter
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